Keith Hart on Tue, 12 Feb 2008 09:28:53 +0100 (CET)

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<nettime> after the disaster

Thirty years ago I was discussing the state of the world with a
radical philosopher at Yale. She dismissed the Americans of course,
the Russians, British, Germans, Chinese and Japanese too. So I
asked her where in the world she looked to for hope. And she said
“Mozambique”, then and now a plucky little country struggling against
capitalist imperialism in darkest Africa. Mozambique qualified because
it was insignificant and far away. She knew nothing of the place
personally, but it offered a measure of hope without compromising her
bleak picture of the world she lived in.

Naomi Klein’s ‘The Shock Doctrine’ likewise presents a monolithic
account of ‘neoliberalism’ that leaves room for a solution only at
the margins. [1] Her account, which comes endorsed by many radical
literati including John Le Carré, Arundhati Roy and John Berger,
starts with the ‘Chicago Boys’ in Latin America’s Southern Cone during
the early 70s. She covers much the same ground as David Harvey in ‘A
Brief History of Neoliberalism’. [2] Harvey makes a contrast between
the ‘embedded liberalism’ of the welfare state consensus from the
1940s to the 70s and the ‘disembedded’ markets that followed; Klein
speaks of neoliberalism as a ‘counter-revolution’. Both cover the last
three decades or so without attempting to place them in any larger
analysis of modern world history. Harvey speculates about inflationary
and deflationary routes out of neoliberalism, but Klein appears to see
no end to it.

Both authors try to tell One Big Story, the restoration of capitalist
power by Reagan and Thatcher (with peripheral support from Pinochet
and Deng); but Klein extends hers to include a string of disasters
since the millennium (September 11th, the invasion of Iraq, the
tsunami, Katrina). She represents this sequence as a wholesale
looting of public assets by corporate interests in the name of Milton
Friedman’s free market doctrine. ‘Disaster capitalism’ generates and
feeds off ‘economic shocks’ and these seem to be multiplying since the
time when ‘structural adjustment’ imposed brutal economic medicine
on weak governments. Klein links the CIA’s revival of torture to an
earlier history of electric shock treatment, drawing an evocative
analogy between individual and collective loss of memory.

After the dictators, Klein’s narrative takes in the economic warfare
launched under quasi-legal auspices in Bolivia, Poland, China and
South Africa. Thatcher’s revolution was rescued by success against the
Argentine generals. Russia’s wealth was handed over to the ‘oligarchs’
for a pittance and then the IMF organized a boot sale of Southeast
Asian assets to western corporations. And Israel’s coercive treatment
of the Palestinians and Lebanon remains a laboratory for neoliberal
repression everywhere. Developments within the United States all point
in the same direction.

Does she see any hope of something else, born perhaps of popular
resistance to this class warfare? A concluding chapter of two-dozen
pages (out of more than 500) addresses ‘the rise of people’s
reconstruction’. Neo-liberalism’s nemesis is, wait for it, Morales!
Hezbollah! Factory and farm co-ops in Argentina and Brazil! The French
and Dutch rejection of the European constitution (the only reference
to the EU in the whole book)! And Chavez of course. As people sort
among the rubble of their societies, the final sentence tells us that
“they are building in resilience—for when the next shock hits”. Naomi
Klein’s totalizing vision of the contemporary world renders these
scraps of resistance merely symbolic.

If neoliberalism is a counter-revolution, what was the revolution it
overthrew and when did it take place? Perhaps there has been more than
one of each. Now that the neoliberal era is manifestly running up
against its own contradictions, answers to such questions are vital to
any assessment of the prospects for a better world.

In retrospect, the peoples of the world made remarkable gains in
freedom and equality after 1945, when they rejected the society
that had given them two world wars and the great depression. This
involved not only the formation of industrial states committed to
democratic provision of employment, education, health and transport,
but the dismantling of European empire by an anti-colonial revolution,
first in Asia, then in Africa. The Cold War, in its own way, was a
counter-revolution against all that; and it took the form of dirty
wars in Afghanistan, Nicaragua and Southern Africa (precursors of the
‘war on terror’) long after Friedman’s experiments in free market
dictatorship had been launched. A second revolution came with the
collapse of the Soviet Union and apartheid in the early 90s, a much
reduced nuclear threat, the rise of the internet and the emergence
of China and India as economic powers. This wave of liberation soon
provoked the reassertion of state power after September 11th and a new
frenzy of illicit accumulation, not least in Iraq.

What is ‘new’ about neoliberalism (or ‘neo-conservatism’ as it is
called in America, where liberalism still evokes Roosevelt’s New
Deal)? The state’s pretensions to manage national economies have
been progressively dismantled everywhere, while its coercive powers
have been expanded. Some were slower than others to catch onto the
systematic stripping of public assets for private gain, profit
accumulation with no acknowledgment of service, the erosion of civil
liberties and the resurgence of racist imperialism.

The overthrow of social democracy in the name of market fundamentalism
may have been achieved by coercion in Latin America; the privatization
of post-socialism was licensed plunder; small states in regions
like Africa that were already being bled by debt interest were
brought to heel by the ‘Washington consensus’. Maybe the public
authorities in the United States have long been less squeamish
about employing techniques of intimidation in support of corporate
profit. But who persuaded the pillars of European social democracy
to roll over without a fight? The wholesale capitulation of national
political classes to an obscene logic of self-enrichment still needs
an explanation. Neither Klein nor Harvey is much help here.

To take another example from outside Europe, why would the leadership
of the African National Congress throw away the legacy of the
anti-apartheid movement in order to pander to international capital
at the expense of their own long-suffering people? Naomi Klein’s
chapter on South Africa is desperately thin, drawing on a handful of
interviews to force the country into her all-encompassing vision,
while ignoring the nuances of its history and place within the
evolving world economy.

The rise of a sociological rhetoric of ‘embeddedness’ in recent years
reminds us that Karl Polanyi’s stock has never been higher than
today. In ‘The Great Transformation’ [3], Polanyi debunked Victorian
liberalism as the use of state power to secure the freedom of capital
at the expense of all other interests. He condemned the high price the
British working classes paid for the dominance of the ‘self-regulating
market’; but there were also counter-movements within society like
Chartism, as the victims of the new liberalism sought to defend
themselves. Polanyi sometimes wrote of a ‘disembedded’ capitalism, but
industrial markets remained thoroughly ‘embedded’: first, in their
dependence on the state and second through the links they retained
with a range of social institutions. Polanyi’s real objection was not
to the market as such, but to ‘market fundamentalism’.

At a recent London conference, ‘Rethinking economic anthropology: a
human-centred approach’, Jean-Louis Laville [4] reminded us of the two
lessons to be drawn from the history of the twentieth century:

First, market society sustained by a concern for individual freedom
generated huge inequalities; then submission of the economy to
political will on the pretext of equality led to the suppression of
freedom. These two solutions called democracy itself into question,
whether in the form of totalitarian systems or, with a similar result,
through the subordination of political power to that of money. If we
reject both of these options, it is then a question of developing
institutions capable of guaranteeing a plural economy within a
democratic framework, exactly what is compromised when the rationale
of material gain without limit has a monopoly.

Laville, following Mauss and Polanyi, pilloried romantic radicals
who would reject a caricature of the economy in the name of some
future alternative, since all economic possibilities coexist now,
including those that have been variously dominant in history. Our
task is to build democratic solidarity (‘économie solidaire’) through
new institutional combinations and with a new emphasis. This means
combining the free reciprocity of self-organized groups with the
redistributive powers of the state.

It is, however, no longer as obvious as it was for Mauss, Polanyi and
Keynes where the levers of democratic power are to be located, since
the global explosion of money, markets and communications over the
last quarter-century has severely exposed the limitations of national
frameworks of economic management. We are clearly witnessing the
start of another long swing in the balance between state and market.
Central banks are pumping liquidity into failing asset markets. The
rapid switch by the ‘masters of the universe’ from market triumphalism
to the public begging bowl would be surprising, if it were not so
familiar. Before long, a genuine revival of Keynesian redistributive
politics seems to be inevitable. But the imbalances of the money
system are now global, as the financial rescue operation recently
performed on failing American banks by the ‘sovereign funds’ of
some Asian and Middle Eastern governments shows. Society is already
taking the form of large regional trading blocs; and the inability of
the Bretton Woods institutions (World Bank, IMF, WTO) to serve any
interest beyond that of western capital has long been obvious. The
strength of any push to reform global institutions will depend on the
severity of the current economic crisis. A return to the national
solutions of the 1930s is bound to fail.

The shift of economic power from the West to Asia is palpable. But
it is too early to write off the United States which remains the
world’s largest economy and may soon reap the economic benefits
of a lower exchange rate and the sell-off of overpriced assets.
Rather than demonize US imperialism as the source of all our woes,
we should distinguish between the American government, corporations
and people. The main opposition to the monopolistic privatization of
the cultural commons by firms like Microsoft consists of other US
corporations (Sun, HP, IBM) and American activist networks in the
free software/open source movement (with intrepid assistance from
Scandinavia). American voters turned Bush into a lame-duck president
and are now galvanizing world politics again through their choice of
presidential candidates.

It will not do to place our trust for democratic renewal exclusively
on small-scale initiatives in Latin America. The new combinations of
money, machines and people emerging today must be addressed squarely.
For all her vivid writing and journalistic effort, Naomi Klein’s
monochrome synthesis promotes only a politics of evasion and despair.
The world society that has developed in the last half-century has
some features never seen before and many that are perennial. Any way
forward will be worked out by China, Europe, the USA and regional
leaders such as India, Brazil and South Africa. They will build on an
existing diversity that is hardly illuminated by catchall phrases like
‘neoliberalism’ and ‘American capitalism’.

We are in the middle of an economic disaster alright. So far the
politicians, bankers and CEOs who got us into this mess seem to be
surviving, even prospering. But before long, people everywhere will be
asking loudly “What happened to our money, our jobs and our houses?
How did we let them get away with it? How can we make sure it doesn’t
happen again?” Things are likely to become a lot more turbulent
yet; and debates about political economy will then need much more
historical substance than literary fashion seems able to offer at

[1] Naomi Klein, /The Shock Doctrine: the rise of disaster
capitalism/, Metropolitan Books, New York, 2007.

[2] David Harvey, /A Brief History of Neoliberalism/ (2^nd ed), Oxford
University Press, Oxford, 2007.

[3] Karl Polanyi, /The Great Transformation: the political and
economic origins of our times/, Beacon Press, Boston, 1944.

[4]; J-L
Laville ‘Towards a theory of plural economy: in the footsteps of Mauss
and Polanyi’.

Keith Hart

February 2008

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